The Scrambling Dilemma - Los Angeles Times 1986

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The Scrambling Dilemma - Los Angeles Times 1986

Post by tvroadmin » Sun Nov 09, 2014 3:19 am

THE SCRAMBLING DILEMMA: Encryption Isn't Something Satellite Dish Owners Bargained For, and It's Created an Unclrear Future for Sports Viewing

By: Larry Stewart (February 03, 1986) ... dish-owner

For the hard-core sports fan, a satellite dish is more like a satellite smorgasbord. With a single dish, even the largest sports appetite can be satisfied.

Let's say you enjoy pro basketball. There will be 11 NBA games played in the next two nights--three tonight and eight on Tuesday. If you own a satellite dish, you'll get most of them.

If you have cable television, you'll get only two of the 11--the Denver Nuggets playing the Houston Rockets on WTBS tonight, and, if your cable company offers the Prime Ticket Network or you have SelecTV, the Lakers' home game against the Dallas Mavericks Tuesday night.

If you don't have a dish, cable or SelecTV, you're out of luck totally. There are no sports on regular commercial television until Thursday night, when Channel 9 will carry a Laker game at Houston. You won't even get Tuesday night's NHL All-Star Game, which will be televised by ESPN, a cable network.

But any sporting event that is being televised anywhere usually is available to dish owners. Of the NBA's 942 regular-season games this season, roughly 820 will be televised somewhere, and thus available.

The Lakers, the Boston Celtics, the Houston Rockets and the Philadelphia 76ers televise all of their road games on commercial television. Most of the other clubs televise about half of their road games.

In addition, 13 of the 23 NBA teams are now televising selected home games on regional cable. The Celtics, for example, televise almost all of their home games on Sports Channel. The Lakers televise about half of theirs on Prime Ticket. Satellite transmission is used by most of the regional cable services, thus the games are available to dish owners.

If you like baseball, there were 2,064 local telecasts available last season.

There were 524 on superstations such as Atlanta's WTBS, New York's WOR and Chicago's WGN, 565 on various regional pay services such as SportsVision, which carries the Chicago White Sox, and another 975 on local commercial stations.

If you happen to be a fan of the Minnesota Twins, with a dish you got 68 Twin games via KMSP's satellite transmissions. If you are a Boston Red Sox fan, you got 73 games via Boston's WSKB. And on and on.

On Sundays during the football season, dish owners were able chose from among the full schedule of NFL games, not just the ones NBC and CBS decided to show. Dish owners got them all, or almost all, including most home Ram and Raider games.

There is no such thing as a blackout to a satellite dish owner, although some regional telecasts on NBC were not available because the network uses a frequency not compatible with most home units.

Then there are those 11:30 p.m. NBA telecasts CBS forces upon viewers during the NBA playoffs. Dish owners get them live.

After an initial investment of about $2,500--prices now range from $695 for a basic, inexpensive unit to $3,500 for a top-of-the-line unit--dish owners get all the sports they can handle, as well as movies and everything else, live and free.

If this sounds too good to be true, well, it is. Things are changing. The free ride for dish owners may be coming to an end.

Program suppliers, including sports organizations, naturally want to be compensated financially for providing entertainment to dish owners. They say they are not in business to give their product away. Dish owners reply that what comes into their backyards over the airwaves should be theirs for the taking.

The battle lines have been drawn, with the cable industry and programmers on one side, the satellite dish industry on the other.

The cable industry, in an effort to combat what it calls signal pirating, has chosen its weapon. It is called encryption, otherwise known as scrambling.

Scrambling involves encoding a signal at the source before it is sent to a satellite for transmission to affiliates, or cable operators. The affiliates, who are equipped with descramblers, decode the signal and send it to subscribers. Without a descrambler, you get an unwatchable picture.

Scrambling officially began on Jan. 15, now known as S-Day, when HBO and Cinemax, two major movie and entertainment cable channels, began full-time scrambling of signals. Scrambling is expected to be fairly widespread by the end of the year. Sports outlets such as ESPN, the USA network, WTBS, WOR, and Prime Ticket, have plans to encode their signals.

Eventually, the three major commercial networks figure to be scrambling as well. CBS has assigned a task force to look into the issue, but does not have a target date. Jack Weir, NBC vice president of broadcast operations, said his network probably will be scrambling by the end of 1987.

Major league baseball is the first sports organization to actively look into scrambling. Most baseball telecasts may be scrambled by 1987. Other sports are expected to follow baseball's lead.

"We're studying it very closely," said Bryan Burns, the director of broadcasting for major league baseball. "We don't have a target date. Possibly by 1987, possibly never. We still have a lot to learn about scrambling.

"Our situation is different than HBO's. HBO is a service that relies on monthly subscription fees, but people with dishes were getting the service without paying for it.

"To explain our concern, let me use an example. Say St. Louis is playing at Dodger Stadium, and the game is being televised back to St. Louis and is also being televised on Dodgervision. People with dishes can pick up the signals that are going back to St. Louis, while others are asked to pay to see the game on Dodgervision.

"Another example. Of the 81 home games Cincinnati plays, 55 are televised via satellite by opponents. I saw an ad in a Cincinnati paper in which for $33 a month you can lease a dish. After 36 months, the dish is yours.

"So if you are getting 55 home games on TV, you may not want to buy a ticket to Riverfront Stadium.

"Our two main concerns are protecting pay services, such as Dodgervision, and protecting attendance."

Not all is bleak for the satellite dish owner, however. The dish is not on the verge of extinction. Whatever is scrambled can be unscrambled. There is such a thing as a descrambler box.

Said Burns: "If we ever do implement scrambling, I think it would be mandatory that we offer a service in which our signals could be descrambled."

A descrambler now costs about $395. In all likelihood, one descrambler box will be sufficient, unless some program suppliers go with a different scrambling format. But in addition to the cost of the descrambler will be monthly subscription charges for various services. That is what really irritates dish owners.

HBO has set this fee at $12.95 a month. For both HBO and Cinemax, a dish owner is being asked to pay $19.95.

Since S-Day, satellite dish sales have tapered off. Before that, an estimated 70,000 home units were being sold a month, bringing the national total to more than 1.5 million.

Jim Buckley, owner of Santa Anita Video in Arcadia, said: "I was selling an average of two units per day until Jan. 15. Then the stories came out about scrambling and my sales stopped. I haven't sold one unit since then.

"People read the stories and they become scared. Unfortunately, what we're going to end up with is black-market boxes, illegal boxes. They'll hit the market right and left.

"The $19.95 is a ripoff, and it's going to force people to go illegal."

Another dealer, Wally Preimsberger of Wally's in Van Nuys, is more optimistic.

"I say, so what, let 'em scramble HBO and Cinemax," he said. "The movies they show you can rent for a buck or two, anyway. About 75% of my sales are because of sports. You can still get all the sports. Sure, there's talk about scrambling sports, but so far it's only talk."

The satellite dish craze actually started in the '70s, but didn't escalate until a law was signed in October of 1984 that said home units were legal.

Bob Cooper Jr., who lives on the island of Providenciales in the northern Caribbean, halfway between Puerto Rico and Florida, is generally referred to as the father of the home satellite dish industry.

He wasn't the first to have a home satellite dish, which is known in the business as a TVRO (television receive only), but he was one of the first.

The first, according to Cooper, was an Englishman, Steve Birkill, who built a small, experimental system in 1975.

By the following year, Cooper and H. Taylor Howard, then a professor of electrical engineering at Stanford, were both operating what could be called a home satellite dish. According to Cooper, Taylor's first unit used an antenna he had found at a military surplus yard. It had been used on a Navy ship to track missiles.

Cooper's first antenna was constructed of steel beams, bars and a plate. It was 20 feet in diameter, a monster, and weighed more than 3,000 pounds. It had to be directed from satellite to satellite by hand, no easy task. Now, most units are moved by motor drives that are triggered by remote control.

"In 1975, I was a technological writer for a cable television magazine," Cooper said from his home in the Caribbean. "I was attempting to write an article to explain satellite receiving antennas to cable television engineers.

"I was struck by the cost of such an antenna. The cost ranged from $125,000 to $150,000 apiece. I believed there had to be a cheaper way to build one."

Cooper, who became an amateur ham radio operator at the age of 12 and studied electrical engineering at Cal, had a good general knowledge of the field before setting out to build his own dish. It took him about a year and the material cost him only $16,00O.

Cooper became somewhat of a national celebrity in October of 1978 when he wrote an article for TV Guide. In the story, he told how his dish allowed him to watch Johnny Carson's X-rated antics during commercial breaks.

Cooper said the article generated about 10,000 letters, mostly from people wondering how to obtain a satellite dish. At that time, about 200 new units a month were being manufactured, and all of those were being bought by cable companies at about $30,000 each.

Cooper, Taylor and a few others went to work on establishing a new industry--providing home viewers with satellite dishes. They got a break on Oct. 18, 1979, when the Federal Communications Commission did away with rules that required the operators of satellite dishes to obtain licenses.

The industry got its biggest boost on Oct. 30, 1984, when President Ronald Reagan signed Public Law No. 98-549, which made home viewing of satellite cable programming legal.

Philip Hochberg, a Washington attorney who represents the NBA, the NHL and other sports leagues, points out that the law permits viewing of only cable programming and not, say, baseball games on local commercial stations and pay services or NFL games that are either blacked out or not intented for viewing in a particular area.

"I'll admit you've got a problem of enforcing this," Hochberg said. "You can't have a video enforcer knocking on everyone's door to see what is being watched."

Hochberg added that it is also illegal for business establishments, such as sports bars, to show blacked out sports events, or any events for that matter, for commercial gain.

Although there remains a problem of enforcement, a number of sports bars have been taken to court and been fined and/or ordered to cease showing such programming. Last football season, a judge in Alaska ordered bars in Anchorage, Fairbanks and Juneau to stop showing Monday night football games without commercials.

A bar owner in Denver complied with a letter from the Nuggets, who demanded that he stop showing home games.

But for the home viewer, the door was opened by section 5a of Public Law No. 98-549, referred to as the Cable Communications Policy Act. After its passage, dishes, dropping in both cost and size, began selling fast.

According to an article written by Brown for Home Satellite TV, law No. 98-549 did the following:

--Clarified that it is not a violation of law for individual home owners to view any unscrambled satellite cable programming through a satellite dish.

--Permitted satellite programming services to market nonscrambled programming to home viewers (a right they have always had) only if such a marketing plan results from "good faith" marketplace negotiations.

--Increased civil and established criminal penalties for illegal use of satellite signals.

--Left for future resolution access by home users to scrambled satellite signals.

The dish industry scored another victory Jan. 14, when the FCC ruled that most local ordinances could not discriminate against home satellite dishes. Zoning laws had long been a thorn in the side of the dish sellers.

Previously, city ordinances could ban dishes for aesthetic reasons. That is no longer the case.

In regard to the scrambling issue, the FCC will conduct hearings March 6. What the dish industry is hoping for is a moratorium on scrambling, to postpone it for another year or so until more descrambling equipment can be made available.

According to Brown, SPACE's position is that subscription services should be compensated. SPACE believes a fee should be added to the cost of dishes and that money distributed among copyright holders. Of course, deciding who gets how much and distributing it would be a monumental task.

Of particular interest to sports fans in Los Angeles is when the Prime Ticket Network will begin scrambling. Prime Ticket is a relatively new service that televises home Laker, King and Lazer games, plus boxing and tennis at the Forum and a variety of college sports.

Tony Acone, the president of Prime Ticket, said he won't be ready to announce details of Prime Ticket's plans for scrambling for another six weeks. "All I can say at this time is that we are committed to scrambling," he said.

Acone, who has been in the cable television business for almost 20 years, is also the president of Bill Daniels' Cablevision. Acone says widespread scrambling is inevitable.

"What dish owners have to realize is that the programming on the satellite didn't get there by accident," he said. "Millions of dollars were invested to put it there.

"In any other industry in our private enterprise system, someone says, 'I want access to your product,' and you say, 'Here's the rate,' after setting what is perceived as a fair price."

Acone said the main purpose of scrambling is to protect the product. "Our concern is that we're not making one person pay for our service while another person with a dish can steal it," he said.

Actually, Prime Ticket subscribers don't pay a separate fee for the service. But they pay indirectly when they pay their monthly bills from the cable companies because the cable operators in turn pay for the service.

Acone said that Prime Ticket's position on providing descramblers to dish owners will be that the affiliates, such as Group W or Falcon, will handle it. If a dish owner in, say, Falcon's franchise area wants a descrambler for Prime Ticket, he will have to buy it either directly or indirectly through the cable company. The company will also set a "fair market price" for the service, which, Acone said, might be something like $5 a month.

Acone admitted that any price is going to perceived as too high. "The problem is you're asking them to pay for something they've been getting for free," he said.

Cooper, who has nearly two dozen satellite dish antennas at his home and is the publisher of Coop's Satellite Digest, is one of the foremost authorities on the dish industry.

"Looking into my crystal ball, I see that not very far away almost everything on cable television will be scrambled," he said. "For the next year or two or three, the distribution of the software that it will take to descramble will be controlled by cable operators.

"What lies ahead is a difficult time for the satellite dish industry. There will be a vacuum until the end of 1986 and maybe for part of 1987. There will be about half as many products distributed and sold as there have been.

"The nature of the business is going to change. It is going to become more sophisticated. Up until now, anyone could sell a system. You could sell one out of a pickup truck. Now, I think the days of the small entrepreneur setting up a corner store are over.

"We're entering into an area where complicated software will be needed for receiving programming. Eventually, specialty stores may handle the distribution of this software. But, for now, it will be the cable operators.

"It probably will be 1987 or 1988 before the dish industry comes back to be as strong as it has been.

"But in the end, I see the dish industry prevailing. Direct reception is the most efficient way. Technologically speaking, satellite dish reception makes the most sense."

Bob Wolenik, editor of Home Satellite TV, makes a case in an editorial in the March issue of the magazine for satellite dishes being the wave of the future.

"The story of those with vested economic interests trying to hold back the future is constantly repeated around us," writes Wolenik. "U.S. auto manufacturers for years resisted using new techniques to make smaller and lighter cars because they had invested so much in making bigger, heavier cars.

"Typewriter manufacturers for years refused to make anything but mechanical machines, until they were blown out of the water by inexpensive, computerized word processors and printers. Even something as familiar as the morning newspaper was for years laboriously type-set with 'hot metal' (creating each line to be printed out of a lead die) when quick and efficient 'offset' photo machines were available.

"Over and over, evidence suggests that those with vested economic interests in the past are the last to embrace the future. Nowhere is this more evident than in TV technology.

"Engineers at Hughes and elsewhere are currently working on the next generation of more powerful satellites. To be sent up by 1988, these satellites will broadcast 45 watts or more of power, compared to the current 3 to 7 watts. Then, almost anyone in the country should be able to receive direct satellite TV broadcasts with a dish no bigger than a hubcap.

"The new technology allows the viewers to bypass the cable operator and receive the signal themselves direct from space."

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